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From a dollars and cents standpoint, is it now better for your wallet to lease a car or finance one? Swapalease.com, the nation’s largest online car lease marketplace, analyzed an apples to apples to apples comparison of three different car-shopping scenarios using the same vehicle in order to determine where the most savings would be found. Click here for the full data chart.
The three different scenarios included financing a $30,000 MSRP vehicle for 72 months, leasing the same vehicle from a dealer at two 36-month intervals, or assuming an 18-month existing lease four consecutive times. Each scenario contains the financial options over a 72-month time frame, with loans of this length now accounting for 31.8% of all retail car sales and up from 30.2% last year according to J.D. Power.
Financing for 72 Months
After taxes, fees and a pre-purchased extended warranty at the time of vehicle sale, the net amount financed comes out to $33,413.75. Over the life of 72 months this monthly payment is $538.13, totaling $38,745.09 with the 5.00% interest rate. Assuming additional post 36-month maintenance not covered under the extended warranty would total approximately $2,700 (tires, electronics, engine service, etc), the total cash outlay over 72 months comes out to $42,445.09 on a vehicle with an MSRP of $30,000.
*Savings compared to lease: -$2,774.39
*Savings compared to lease assumption: -$5,404.39
Two 36-month Leases from a Dealer
At a residual value of 52%, the calculated net residual value on a $30,000 MSRP lease deal totals $15,600, and the depreciation charge totals $14,000. At 36-month terms, the monthly rent payment after interest and taxes totals $514.45. Including the cap cost reduction of $1,000 and other taxes and dealer doc fees, the total due at inception is $1,829.45. The total cash outlay for the 36-month lease term equals $19,835.35, and $39,670.70 over the 72-month period.
*Savings compared to finance: $2,774.39
*Savings compared to lease assumption: $-2,630.00
Four 18-Month Lease Assumptions (via Swapalease.com)
When a person takes over a similarly priced MSRP lease (valued at $30,000) with 18 months remaining, their monthly payment is $514.45 with $0 down payment. The interest rate of 5.00% and sales tax rate of 6.50% are already baked into that monthly payment at the time of lease assumption. The total cash outlay of $9,260.18 over an 18-month time frame translates to a total cash outlay of $37,040.70 for the 72-month period (four lease assumptions).
*Savings compared to loan: $5,404.39
*Savings compared to lease: $2,630.00
“The financial outcome might be different for customers who hold onto their vehicles for longer than the 72-month period, however, the latest data show that a smaller percentage of drivers are following this path,” stated Melinda Zabritski, Senior Director of Automotive Finance at Experian. In 2012, the average length of ownership for new vehicles stood at 66.2 months, down from 8.1 in 2011, according to Experian.
To analyze the complete data comparison, click here.
Headquartered in Cincinnati, Ohio, Swapalease.com is the world’s largest automotive lease marketplace and the pioneer in facilitating lease transfers online. More specifically Swapalease.com matches individuals who want to get out of their lease with people who are looking for short-term lease agreements. Prospective buyers can search the listings for the exact vehicle they want, and then register for a nominal fee, allowing them to use Swapalease.com’s safe online system to contact the prospective seller and close the deal.